The Japanese Candlestick Origins

The Japanese candlestick technique for analyzing charts is the oldest known, dating back to the 18th century when it began to be used in Japan’s futures markets, specifically in rice trading.

There, feudal lords traded rice collected from taxes. Over time, they needed more money and began selling rice from future harvests. These contracts became known as “empty rice,” as they did not yet exist, giving rise to the first precedent of the financial futures we know today. 

This is where Homma Munehisa enters, a Japanese merchant who established a network that communicated rice prices and allowed him to buy empty rice in advance. Homma recorded the opening, closing, high, and low prices of each day and found certain patterns that repeated, enabling him to predict future price movements. 

This is how the famous Japanese candlesticks were born, although their popularity exploded in the West in the 1990s thanks to Steve Nison.